TaxTMI 
TaxTMI 
2017 (3) TMI 572
X X X X Extracts X X X X
X X X X Extracts X X X X
....d Pricewaterhouse Coopers, Belgium were not in the nature of fee for Technical services. The Ld. CIT(A) also erred on facts and in law in holding that these services did not constitute fee for technical services under Indo-Belgium DTAA. iii) Therefore the order of the Ld. CIT(A) deserves to be deleted and that of the AO restored." 3. In this case, the assessing officer on verification of remittances made during the year by the assessee found that the following remittances towards technical consultancy and professional services were made without withholding tax in terms of section 195 of the income tax act:- Sr. No. Name of the Payee Amount of remittance Date of remittance Nature of remittance 1 B. A. RESEARCH INTERNATION AL L P, USA 20,48,570 13,34,008 20,71,912 AUG., 2007 SEPT.,2007 SEPT.,2007 FEES FOR BIOANALYSIS OF SAMPLES FOR CLINICAL TRIALS. 2 B. A. RESEARCH COMPANY, CANADA 19,90,912 AUG., 2007 FEES FOR BIOANALYSIS OF SAMPLES FOR CLINICAL TRIALS. 3 LINK LATTERS LLP, BRUSSELS 13,32,323 OCT., 2007 PROFESSIONAL FEES 4 PRICE WATER HOUSE COOPERS ASESOD C NEGOCIES, BELGIUM 60,06,188 NOV., 2007 PROFESSIONAL FEES The assessing officer had passed o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ded that services, although technical in nature, can be said to be 'fees for included services' only when they "make available" technical knowledge or skill to the recipient of service or the recipient can apply the same on his own. In this connection, the observations made in the decision of the Hyd. Tribunal as laid down in the case of Dr. Reddy's Laboratories Ltd. 35 taxmann.com 339 squarely applies to the facts of the appellant's case, since it relates to rendering of Bio-Analytical services by the non-resident party and under the framework of the same language of Article 12(4)(b) of the India-USA and India-Canada DTAAs: "In this case, as rightly considered by the learned CIT(A), the assessee was conducting clinical trials through the CROs in USA to comply with the regulations therein and the CROs who are experts in this field were only conducting studies and submitting the reports in relation thereto. They are neither transfer of technical plan or technical design nor making available of technical knowledge, experience or know-how by the CROs to the assessee company. In fact, the assessee company did not get any benefit out of the said services in USA and as....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Linklaters LLP, Brussels and PricewaterhouseCoopers, Belgium. The appellant has also relied on the Appellate Order dated 02/09/2011 in the case of one of the appellant's group companies, B.A. Research India Ltd., wherein my predecessor had occasion to decide an identical issue, as in the case of the appellant, in favour of the assessee. Having gone through the said appellate order, I am also inclined to follow the same. In view of the provisions of 'fees for technical services' of the DTAAs with USA, Canada and Belgium, as logically interpreted by the above referred judicial precedents, the ratio of which can be squarely applied on the facts of the appellant's case, I am inclined to agree with the submissions of the appellant that the services provided to the appellant by the non-resident parties, did not fall within the purview of 'technical services' under the said Articles. Therefore, there was no liability on the appellant to deduct TDS u/s. 195 of the IT. Act and accordingly, the appellant could not be held liable to pay tax as an 'assessee in default' u/s. 201(1). It is pertinent to note that *he AO, has in his order u/s. 201(1), held th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... should be enabled to do the same thing next time without recourse to the service provider. The services provided by non residents did not involve any transfer of technology. It is not even the case of the Assessing Officer that the services were such that the recipient of service was enabled to perform these services on its own without any further recourse to the service provider. It is in this context that we have to examine the scope of expression 'make available'. 9. As for the connotations of make available clause in the treaty, this issue is no longer res Integra, There are at least two nonjurisdictional High Court decisions, namely Honble Delhi High Court in the case of DIT Vs Guy Carpenter & Co Ltd ([(2012) 346 ITR 504 (Del)] and Honble Kamataka High Court in the of CIT Vs De Beers India Pvt Ltd [(2012) 346 ITR 467 (Kar)] in favour of the assessee, and there is no contrary decision by Honble jurisdictional High Court or by Honble Supreme Court. In De Beers case (supra), Their Lordships posed the question, as to '"what is meaning of make available", to themselves, and proceeded to deal with it as follows: The technical or consultancy service rendered should ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the assessee, by the order dated 30th November 2015 passed by a coordinate bench. In view of these discussions, and as we concur with the well reasoned findings of the learned CIT(A), we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter on this count as well. The order of the CIT(A) stands confirmed." 6. We noticed that non-resident parties have no PE in India. We find that Article 12(4)(b) of the DTAAs with USA and Canada is not applicable since the non-resident parties did not 'make available' any technical knowledge, and the services rendered to the assessee by the above foreign parties has not transmitted any technical knowledge. We noticed that mere provision of bio-availability services cannot be said to result in a transfer of technology as the assessee has not derived enduring benefits to utilize this knowledge on his own in further. Regarding remittance to Linkalters LLP, Belgium and Price Water House Cooper, Belgium, we observed that services rendered by the non-resident were for the purpose of due diligence in connection with the proposed acquisition outside India. The services were rendered outside India and utilized o....